Telstra shareholders face long wait

A cost-benefit analysis of Labor’s $43 billion high-speed broadband project could further delay a shareholder vote on
Telstra
’s $11 billion deal with NBN Co and the government,
David Thodey
warned.

The embattled Telstra chief executive said a vote on the deal was already subject to a series of conditions including Australian Tax Office rulings and the passage of the government’s ­proposed legislation surrounding the deal.

A much called for cost-benefit analysis of the project could delay a shareholder vote beyond June next year, he said, as could any potential delays to the passage of ­legislation until the Greens take the balance of power in the Senate in July.

But Telstra assured investors they would be provided with an independent expert’s report on a final deal and given 28 days to make an assessment before voting.

“We will make it simple to understand why we would recommend the deal," Mr Thodey said.

Related Quotes

Company Profile

He also hit back at criticism that Telstra has not disclosed enough information on the non-binding agreement, saying it risked “misinforming the market" if it released facts that could change.

His comments follow complaints by
David Murray
, the chairman of ­Telstra’s biggest shareholder, the Future Fund, that investors were “in the dark" about details of the deal, under which Telstra will transfer ­customers from its dominant home phone network to the national broadband network.

Telstra said yesterday 50 per cent to 60 per cent of $9 billion of the deal with NBN Co related to fair consideration for decommissioning its copper and cable broadband service and co-operating with NBN Co. The other 40 per cent to 50 per cent related to a 30-plus year commitment by NBN Co to use Telstra’s infrastructure.

The remaining $2 billion would come from a deal with the government that includes the establishment of a company to take on Telstra’s respon­sibility for the Universal Service ­Obligation.

“Definitive agreements are not dependent on legislative changes, we can keep them locked away," Mr Thodey said. “Our target is to get them done by the annual meeting [in November] but we still have a lot of work to do there. If we can get the agreements away by Christmas, that would be tremendous.

“If legislation was introduced this year or early next year, there is a good possibility we could get to our shareholders by the middle of next year."

Chief financial officer
John Stanhope
said Telstra would spell out to shareholders the impact of trying to compete with NBN Co rather than ­co-operating.

That impact would include a denial of access for future mobile phone spectrum and the forced sale of Telstra’s stake in Foxtel.